Ireland’s sovereign credit rating was raised to A- by Fitch Ratings as the country’s economy starts to grow.
The rating was increased from BBB+ with a stable outlook, Fitch said in a statement today.
Ireland is recovering from the collapse of its real estate market after a decade-long housing boom, a crash that forced the country to take an international bailout. The country exited the rescue program in 2013 and its economy will grow by 3.5 percent this year, according to Dublin-based Davy, Ireland’s largest securities firm.
“Market financing conditions have steadily improved over the past two years,” Fitch said in the statement. Economic growth will become more balanced “as domestic demand turns positive driven by private consumption and investment,” it said.
The yield on Ireland’s benchmark 10-year government bonds fell below 2 percent for the first time on record today, reaching a low of 1.97 percent. The spread, or difference, with equivalent German bonds fell to 97 basis points.
Irish borrowing costs have tumbled since the height of the country’s financial crisis, when the nation’s government pledged to inject 67.5 billion euros into its banking system.
Standard and Poor’s boosted its rating on the country’s debt to A- from BBB+ in June, which means that Ireland’s capacity to repay bondholders is “strong.” Moody’s Investors Service raised its ranking to Baa1 in May, meaning the debt has “moderate credit risk.”
Ireland sought a bailout from the troika of the International Monetary Fund, European Union and European Central Bank in 2010 as its borrowing costs surged and budget deficit swelled in the wake of the euro region’s worst banking crisis. It exited the rescue program in December.
Gross domestic product rose 2.7 percent in the first quarter, the most since the end of 2012. The economy grew 4.1 percent from the year earlier.
© Copyright 2014 Bloomberg News. All rights reserved.